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Softwood Log Prices Increased in Russia in 2009, While Hardwood Prices Fell beca use of a 72% Decline in Log

Exports, Reports WRQ Despite large timber resources, Russia struggles to attract investments within t he forest industry because of political and financial uncertainty in the country . Domestic prices for softwood sawlogs and pulplogs were up in 2009, while hardw ood log prices fell as a result of a sharp decline in log exports to Finland, re ports the Wood Resource Quarterly. Seattle, WA, April 14, 2010 -- Domestic softwood sawlog prices have moved up in Russia in 2009 both in Rouble and in US dollar terms. In the 4Q, the average pin e log prices were over 30% higher than in the 1Q/09 (in Ruble terms they were up 15% during the year), as reported in the Wood Resource Quarterly. The major rea son for the price jump was that production of lumber and plywood picked up towar ds the end of last year, and demand for logs was slightly higher. Softwood pulpwood cost also went up during 2009 in Rouble terms, but hardwood pu lpwood prices fell. The hardwood log market changed dramatically during 2009 bec ause of the sharp reduction in exports of birch logs to Finland. The export volu mes were down by 8.5 million m3, or 72%, from 2008 mainly as a result of reduced demand for hardwood fiber in the Finnish pulp industry. The Russian governmentâ s ambiguity and lack of clarity regarding the future policies of log export taxes has resulted in a reluctance from foreign companies to invest in Russia, and man y forest companies are considering other regions for their long-term supply of w ood raw-material. Russiaâ s Prime Minister Mr. Putin announced last year that the current log export tax for softwood timber will remain at 25% of the log value (with a minimum of â ¬ 15/m3) for 2010. He also hinted that this tax might be extended to 2011 if the d emand for Russian forest products had not improved by that time. The key message in the Prime Ministerâ s statement was that Russia has no intentions of suspending the export tax altogether as had been requested by the Finnish Government and b y the EU. There are, however, indications that the duty-exemption for birch logs night be raised from top-diameter 15 mm to 24 mm. In addition to a decline in demand for Russian logs, the wood supply increased i n the second half of 2009. The winter was very cold in western Russia this year, which was good for logging. More timber is expected to be available in the spri ng and with substantial log inventories, costs for both sawlogs and pulplogs can be expected to decline later in the spring. Official statistics show that timber harvests were down 15% in 2009 as compared to the previous year. This seems low considering the substantial decline in log exports and the reduced domestic production of lumber, wood-based panels and pul p last year. WRI estimates that the actual decline in timber harvests last year was closer to 20%. Global timber market reporting is included in the 50-page publication Wood Resou rce Quarterly. The report, established in 1988 and with readers in over 25 count ries, tracks sawlog, pulpwood, lumber and pellet prices in key regions around th e world and also includes regular updates of the latest developments in internat ional timber, pulp, lumber markets. Contact Information: Wood Resources International LLC, Hakan Ekstrom, Seattle, U SA, www.woodprices.com Contact : Hakan Ekstrom Wood Resources International LLC PO Box 1891 Bothell, WA 98041 USA

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